The Asian market for medical equipment was worth around USD 4.6 billion in 2013 and is expected to hit USD 9 billion by 2019. Malaysia, Thailand, and Indonesia currently account for 65% of the medical product market in the region. The Steinbeis Malaysia Foundation is providing support to Malaysian business to help them register their medical products and promote them in international markets.
The economies of the countries in Southeast Asia are flourishing. According to figures issued by the International Monetary Fund (IMF), the average annual GDP growth in Asian countries was 4.8% in 2014. This significant economic growth has fuelled an expansion in the middle classes, and, in turn, this is fuelling health care spending in the region. The result is further growth for the medical equipment industry. In Malaysia, the industry is highly diversified, ranging from rubber to latex, textiles, plastics, mechanical engineering, and electronics. The industry now manufactures a broad spectrum of products and medical devices: medical gloves, implants, orthopedic devices, dialysis machines, equipment needed in diagnostic imaging, laparoscopic devices, equipment used for medical, surgical, dental, or optical treatment, and general medical instruments.
Malaysia is an important producer of rubber and the leading supplier of latex products. These include products such as syringes and surgical gloves. According to estimates, roughly 60% of all rubber gloves and around 80% of catheters used in the world were made somewhere in Malaysia. In recent years, the country has witnessed growth in the export of diagnostic imaging devices, especially electrocardiographs and other electronic diagnostic devices.
The Malaysian government considers the health care industry one of the most important sectors of the domestic economy and the country is currently investing huge sums in setting up the right infrastructure and supporting clinical research. At the latest count, there were more than 350 hospitals in Malaysia, of which 150 are run by public authorities. The market for medical equipment in Malaysia was worth USD 1.36 billion in 2013, of which USD 1.17 billion was invested in imported products. The market is expected to keep growing at an average of 16.1% (CAGR) and should be worth USD 2.87 billion by 2018. There will be tremendous demand for medical consumables and dental products.
The key players in the Malaysian medical equipment market include domestic manufacturers, suppliers of raw material and services to the companies producing medical equipment, and importers and exporters of medical devices. Currently there are over 190 companies operating in the Malaysian medical equipment market, most of them small and medium-sized enterprises, and most of these produce medical gloves. There are more than 20 medical equipment multinationals that also produce gloves for non-medical purposes. They have chosen to operate in Malaysia and to use it as an off-shore location for their production. Significant multinationals have invested in Malaysia, including Agilent, B. Braun, St. Jude Medical, C.R. Bard, Symmetry Medical, Teleflex, Resmed, Convatec, Ciba Vision (a subsidiary of Novartis), Accellent, Kelpac Medical, Eurocor, Criticare, Ambu, Toshiba Medical Systems, and Haemonetics.
Malaysia sees itself as the ideal location to invest in medical products because it strictly regulates the protection of intellectual property rights. It is also a favorable strategic location in geographical terms. Other factors that work to the advantage of investors are the number of highly qualified production and administration workers and these go hand in hand with an as-yet unsaturated domestic market offering plenty of growth potential. Working through the Malaysian Investment Development Authority (MIDA), the Malaysian government has introduced incentives to stimulate interest among foreign companies to invest in the Malaysian market.
A process has been underway for some time to introduce medical equipment regulations step by step. The first phase started on January 12, 2006, allowing companies to register voluntarily. On February 9, 2012, a medical equipment act was passed in parliament. This came into effect on July 1, 2013, by which time all medical products had to be registered if they were produced in, imported into or sold in Malaysia. There is a two-year transitional period for registering medical products and companies have one year to take care of registration, after which the law is enforced without restriction. The aim of introducing the new legislation in 2012 was to protect patients and other customers against unapproved or substandard medical products. Medical equipment is categorized into four categories from A to D depending on the level of risk they involve and their intended use. Under the new regulations, the producers and importers of equipment also have to be registered with the medical equipment authority, a separate department at the Malaysian Ministry of Health. Its responsibility is to oversee the medical equipment industry. The Malaysian medical equipment laws are intended to help Malaysia gain international recognition as a reliable producer of medical products. It should also help attract direct investments from overseas, instill more confidence in the market, and open the door to more domestic companies entering into joint ventures with foreign enterprises.
Malaysia has the potential to raise its profile as a key player in the medical equipment market, not only in the field of R&D but also as a producer. This is because the supporting industries for medical equipment are already well established. These include the production of sterile medical packaging, precision technology, tool and mold making, material processing, contractual injection molding, assembly, mechanical engineering, and electronics. This supporting infrastructure bolsters the standing of Malaysia as a location for outsourcing and as a global provider of components to be used by companies that produce medical equipment and instruments.
The primary aim of the Steinbeis Malaysia Foundation is to provide a link between universities on the one hand and industry on the other, particularly in the field of medical equipment, and in doing so, to foster efficient and effective collaboration when it comes to sharing knowhow and technology. Thanks to its international network of experts, the Steinbeis Malaysia Foundation is in an ideal position to offer industry ways to “outsource innovation.” The portfolio of services offered by the Steinbeis partnership enterprise range from short consulting sessions, to setting up transfer centers at the overlap between business and science, and ascertaining the requirements of industry. Steinbeis Malaysia will continue to provide support to industry players, irrespective of their size or specific field of activity.
Dr. Abdul Reezal is director of the Steinbeis Malaysia Foundation, a Steinbeis Partnership Enterprise. Its key fields of activity include health care, nanomaterials, electronics, and electrical engineering.
Dr. Abdul Reezal
Steinbeis Malaysia Foundation (Cyberjaya, Malaysia)
SU1842@stw.de